Personal Loan FAQs

What is a Personal Loan?

Personal loan is a loan which is taken for immediate personal use. It can be taken for any personal use like for a vacation, marriage in the family, sudden medical expenditure etc. Personal loan doesn’t require any collateral security or any surety and is easily available. The amount of loan ranges from Rs.50, 000- Rs. 30 lakhs with a repaying period of 1-5 years.

What are the advantages of Personal Loan?

• Unsecured loan: Personal loan is unsecured loans and doesn’t require any collateral security or any surety.
• Widely available: Personal loan is offered by all major public and private sector banks.
• Hassel free procedure and easy to apply: Personal loan gets quick approval and the paperwork work is also minimal. Personal loan can be applied online and it gets approved in two working days. The loan disbursement is done generally within two working days.
• Large loan amount: Personal loan amount ranges from R.50, 000-Rs.30 lakhs which helps to cater large requirements.
• Flexible loan tenure: The tenure of personal loan ranges from 12 months-60 months which is quite long.
• Flexible usage of funds: Personal loan can be used freely for any personal use. The banks are only interested in the repaying capacity of the borrower.

What is the amount of personal loan one can get?

The minimum and the maximum amount of loan vary from bank to bank and also the repaying capacity of the borrower. However the banks and the NBFC’s offer personal loan ranging from minimum Rs.1000 to maximum Rs.15 lakhs or even 30 lakhs depending on the financial status of the borrower.

What is the tenure of the personal loan?

The tenure of repayment of personal loan generally ranges from 12 months to 60 months.

What are the interest rates on personal loan?

The personal loan interest rates by each bank are calculated by their own unique classification method. The interest rates vary from 12.99% to 25% for various banks.

What are the charges applicable for personal loan?

The banks mainly charge following fees:

• Processing fees: The processing fee varies from bank to bank. But generally is in the range of 05%-2.5%.
• Prepayment Charges: Few banks take pre payment charges i.e. they charge if the borrower pays the loan amount before the tenure. Generally the pre payment charges are in the range of 0%-5%.
• Cheque Bounce Charges: Few banks charge if the cheque deposited gets bounced. It is in the range of Rs.500 per cheque to Rs.1000 per cheque.
• There are other charges like cheque swap charges, amortization schedule charges, statement of account charges, duplicate statement issuance charges etc. which is different for every bank.

What are the eligibility criteria for personal loan?

The eligibility criteria for personal loan vary from bank to bank. Banks decide the repayment capacity of the borrower on the basis of age, income, employment and work experience. The criterion is mainly based on the work profile of the borrower i.e. whether he is self employed or salaried.

Eligibility for self employed:

• Individuals in the age group 24 years to 65 years can apply
• Borrower should have minimum of 3 years work experience

Eligibility of salaried:

• Individuals in the age group 21 years to 58 years can apply
• Borrower should be with the current employer for minimum 1 year

How to choose the best personal loan?

Calculate the loan cost on the basis of interest rates and other charges of various banks:

• Choose lowest Interest rates: The personal loan interest rates range from 12.99% -25%. One must go for the loan offering minimum interest rates.
• Check Processing fees and other charges: When going for personal loan one must read all the charges carefully. Different banks have different processing fees ranging from 0.5%-2.5%. Many banks don’t charge pre payment penalties which is advantageous for the borrower.
• EMIs: The monthly installments change with the tenure. If the tenure is short the EMIs are high but the interest amount is less. But if the tenure is long the EMIs are low but the interest amount is high. So one should compare the various EMIs according to the repayment capacity.
• Check out the eligibility criteria: The banks offer personal loans on the basis of eligibility criteria and this varies from bank to bank. One should check the eligibility criteria for personal loan in various banks to get the best deals.

What are the documents required for personal loans?

The documents required to process personal loan for salaried

• Identity proof
• Current / permanent residence address proof
• Salary slip for 3 months
• 3 -6 months Bank Statements
• Appointment letter and proof of work experience
• Photograph and PAN card photocopy

The documents required to process personal loans for self -employed

• Identity proof
• IT Returns CA certified copy for 2 years complete set
• Business continuity/existence proof for last 3 years
• Education proof
• Partnership Deed and other mandatory documents
• Balance Sheets and Profit and loss account
• Photograph and PAN card photocopy